John C. MenziesIntroduction: The History and Scope of H.R. 1
H.R. 1 2025, also referred to as the “H.R.1 – One Big Beautiful Bill Act” is a flagship piece of Trump legislation passed by the 119th Congress of the United States in 2025. Historically, the designation “H.R. 1” is reserved for bills considered top priorities by the House of Representatives’ majority party, addressing critical national issues such as economic growth, energy policy, or tax reform. This iteration of H.R. 1 is a sweeping legislative package that tackles a broad range of policy areas, including energy production, tax incentives, immigration, defense, and health care, with a strong emphasis on enhancing domestic resource development and reducing regulatory burdens.
Introduced to address pressing economic and security concerns, H.R. 1 aims to bolster U.S. energy independence, promote domestic manufacturing, and streamline access to federal resources. H.R. 1 reflects a policy shift toward prioritizing economic development and national security, particularly through provisions that facilitate mineral and energy extraction and necessary access to federal lands. Spanning multiple titles and hundreds of sections, H.R. 1 amends existing laws, introduces new programs, and rescinds or limits numerous environmental regulations to create a more favorable environment for industry while balancing federal revenue and land management needs. This blog post focuses specifically on the bill’s provisions related to minerals extraction (oil, gas, and critical minerals) and access to federal lands, exploring their implications for energy security, economic growth, and land use policy, and concludes with an evaluation of their impact on the minerals and oil and gas industries and the U.S. economy, with a specific focus on tax credits and incentives.
Expansion of Domestic Energy and Minerals Production
H.R. 1 prioritizes domestic production of oil, gas, and critical minerals, recognizing their importance for energy independence, national security, and technological advancement. The bill targets federal lands managed by agencies like the Bureau of Land Management (BLM) and the Department of the Interior, making them more accessible for resource exploration, development and extraction. By streamlining permitting, setting clear royalty structures, and offering tax incentives, the legislation aims to boost industry investment while ensuring federal returns.
Oil and Gas Leasing on Federal Lands
A cornerstone of H.R. 1 is the restoration and expansion of oil and gas leasing programs on federal lands, particularly in areas like the National Petroleum Reserve-Alaska (NPR-A). The bill mandates that the Secretary of the Interior conduct lease sales offering at least 400,000 acres per sale, ensuring significant access to federal lands for exploration and production (H.R. 1, Pages 67–73, Sections 40016, 50303–50304, 60066–60070). These activities must align with approved resource management plans under the Federal Land Policy and Management Act of 1976 (43 U.S.C. 1712), and areas under existing leasing moratoria are explicitly excluded to avoid legal disputes (Page 68).
To facilitate access, H.R. 1 streamlines permitting processes by rescinding funding for certain environmental review programs, such as those under the Clean Air Act (Page 84, Section 60005; Page 86, Section 60023). This reduction in regulatory oversight aims to expedite lease approvals, making federal lands more readily available for oil and gas companies. The bill also sets a minimum royalty rate of 12.5%, more consistent with corporate practice, for leases to ensure fair returns for the federal government, with 30% of revenues allocated to the U.S. Treasury and potential distributions to states (Pages 71, 73). The Secretary of the Interior is granted flexibility to establish additional terms and conditions, allowing adaptive and likely rapid management of land access based on market and environmental factors (Pages 11–12, 23–24).
Critical Minerals: Reducing Foreign Reliance
These credits are time-limited, with some phasing out by December 31, 2033, to spur near-term production (Page 203). While the bill does not specify exact federal land parcels for critical minerals, it references qualified facilities, which may include BLM-managed lands, and leverages streamlined permitting to enhance access (Page 184). This focus underscores the importance of federal lands in securing domestic supply chains for critical minerals vital to the security of technology and defense sectors.
While the bill does not provide an explicit definition of critical minerals, it references critical minerals in the context of production at qualified facilities and excludes materials produced by prohibited foreign entities (e.g., Chinese military companies under Section 1260H of the William M. Thornberry National Defense Authorization Act, Pages 182–187). This suggests that H.R. 1 adopts the prevailing U.S. government definition of critical minerals.
Department of Energy Definition of Critical Minerals
According to the Energy Act of 2020 (30 U.S.C. 1606), a critical mineral is defined as a non-fuel mineral, element, substance, or material that is essential to the economic or national security of the United States, has a supply chain vulnerable to disruption and serves an essential function in the manufacturing of a product, the absence of which would have significant consequences for the economy or national security.
More specifically the 2023 U.S. Department of Energy Critical Materials Assessment (CMA) defines critical minerals and materials based on their importance to clean energy technologies and their associated supply risks, evaluated through a formal screening methodology. The CMA is up for review in 2026. Unlike previous Critical Materials Strategy (CMS) reports, this assessment expands the definition to include engineered materials like silicon carbide (SiC) and electrical steel, in addition to raw minerals, reflecting their significance in clean energy applications such as electric vehicle (EV) inverters, transformers, and wind turbine magnets. Criticality is assessed by analyzing material importance to energy technologies and supply chain vulnerabilities, considering factors like material availability, equipment, workforce, logistics, regulations, and market conditions. The assessment adopts a global, forward-looking perspective to 2035, focusing on clean energy deployment scenarios, contrasting with the U.S. Geological Survey’s retrospective, U.S.-economy-focused approach.
Short-Term Criticality (2020–2025)
Seven materials are identified as critical in the short term: dysprosium (Dy), neodymium (Nd), gallium (Ga), graphite, cobalt (Co), terbium (Tb), and iridium (Ir). These are vital for applications like EV and wind turbine magnets (Dy, Nd, Tb), batteries (Co, graphite), LEDs (Ga), and hydrogen electrolyzers (Ir). Their criticality stems from high demand driven by rapid EV adoption, offshore wind growth, and hydrogen technology development, coupled with supply risks such as low yield (e.g., SiC), high costs, or concentrated production (e.g., rare earths). Nine materials—lithium (Li), uranium, electrical steel, nickel (Ni), magnesium (Mg), SiC, fluorine, praseodymium (Pr), and platinum (Pt)—are deemed near critical, reflecting moderate supply risks or substitutability (e.g., Pr is less critical than Nd due to its substitutability in magnets).
Medium-Term Criticality (2025–2035)
The medium-term assessment identifies 13 critical materials, with nickel, platinum, magnesium, SiC, and praseodymium joining the short-term critical list due to their increasing roles in batteries, vehicle lightweighting, and hydrogen technologies. Aluminum (Al), copper (Cu), and silicon (Si) shift from non-critical to near critical, driven by their growing importance in electrification, solar photovoltaics, and vehicle lightweighting. The shift reflects projected demand surges from EV market growth, grid expansion, and renewable energy integration. Materials like lithium become critical due to broader use in battery construction, while graphite remains critical for EV and stationary storage batteries. The medium-term increase in critical materials highlights anticipated supply chain pressures as clean energy deployment accelerates.
USGS Definition of Critical Minerals
The U.S. Geological Survey (USGS), acting under the authority of the Secretary of the Interior, maintains a list of critical minerals. The 2022 USGS list includes 50 minerals, such as aluminum, cobalt, lithium, rare earth elements (e.g., neodymium, dysprosium), and others, selected based on their supply chain risks and importance to industries like energy, defense, and technology. This list does not include for example copper as the USGS did not consider that there was a significant probability of supply side disruption.
Federal Land Access and Management
The federal government owns approximately 640 million acres of land in the United States, which accounts for about 28% of the nation’s total land area of 2.27 billion acres (the Congressional Research Service and the U.S. Department of the Interior). The majority of federal lands (around 95%) are managed by four agencies:
- Bureau of Land Management (BLM, ~244.4 million acres),
- U.S. Forest Service (USFS, ~193 million acres),
- National Park Service (NPS, ~80 million acres), and,
- U.S. Fish and Wildlife Service (FWS, ~89.2 million acres, with 85.9% in Alaska).
The Department of Defense manages an additional ~11.4 million acres. Most federal lands are concentrated in the Western states and Alaska, with Nevada (80.1% federal land) and Alaska (222.7 million acres) having the highest proportions.
Access to federal lands for minerals extraction is structured to balance economic goals with other land uses. H.R. 1 allows for leasing in parallel with existing resource management plans, ensuring that extraction occurs in designated areas while respecting existing restrictions (Pages 66–68). For example, the bill references the National Forest System (16 U.S.C. 1609(a)) and BLM lands, where minerals extraction may compete with other activities like forestry or renewable energy projects (Pages 75–76). The Secretary of the Interior is tasked with by setting conditions for lease sales (Pages 11–12) and coordinating with other users to minimize conflicts and expedite development.
The bill also imposes fees for renewable energy projects on federal lands (Page 3, Section 50303), which could limit access to areas with overlapping mineral assets. Additionally, protections for tribal lands, such as those under the Indian Health Care Improvement Act (Page 11), may restrict extraction in certain regions, requiring consultation with tribal entities. These provisions highlight the complexity of managing federal lands for multiple purposes, from resource extraction to conservation and cultural preservation.
Reducing Regulatory Barriers and Improving Clarity
A key feature of H.R. 1 is its effort to reduce regulatory hurdles for accessing federal lands. The rescission of funding for environmental programs, such as diesel emissions reductions (Page 84) and environmental review (Page 86), aims to streamline permitting by limiting the scope of environmental impact assessments. This could significantly accelerate access to federal lands, but will almost certainly generate conflict with various ecological groups.
H.R. 1 (Page 71) explicitly sets the royalty rate for oil and gas leases at not less than 12.5%, indicating a continuation of the minimum rate for onshore leases but ensuring it is codified for new leases under the bill’s provisions. H.R reinforces the existing 12.5% as the minimum, with the possibility of higher rates in specific cases (e.g., competitive bidding or offshore leases). For context, some states and private leases may have had higher rates (e.g., 16.67% or 20%), but the federal onshore standard was consistently 12.5% before H.R. 1.
For clarity the previous royalty rate for oil and gas leases on federal lands, prior to the changes outlined in H.R. 1, was generally 12.5% for onshore leases, as established under the Mineral Leasing Act of 1920 and subsequent regulations. This rate applied to most federal oil and gas leases administered by the Bureau of Land Management (BLM) and was the standard minimum for production on federal lands. However, for certain offshore leases in shallow waters managed by the Bureau of Ocean Energy Management (BOEM), the royalty rate was historically 12.5% but increased to 16.67% (1/6th) for many leases issued after 2008, particularly following the Deepwater Royalty Relief Act and other regulatory adjustments.
Funding allocations further support land access by providing resources for infrastructure, such as facility upgrades and enforcement activities (Pages 289–318, Sections 100051–100055). While some funds are directed toward border security infrastructure (Page 286), which may restrict access near U.S. borders, others support leasing operations, ensuring that federal lands are effectively managed for extraction.
Conclusion: Implications for Industry and the U.S. Economy
H.R. 1’s provisions on minerals and energy extraction and federal land access, supported by targeted tax credits and incentives, will significantly impact the oil, gas, and critical minerals industries, with substantial positive effects on the U.S. economy in both the short and long terms. Below, we evaluate these implications, with a specific focus on the role of tax credits and incentives.
Implications for the Oil and Gas Industry
- Short-Term Impact: The streamlined leasing process and reduced environmental oversight (Pages 84, 86) will accelerate access to federal lands, enabling oil and gas companies to initiate exploration and production within 1–3 years. The mandate for large-scale lease sales (400,000 acres per sale) ensures a steady supply of accessible land, boosting exploration and drilling activities (Pages 67–73). The 12.5% royalty rate is more consistent with private land royalty rates (Page 71). While H.R. 1 does not explicitly mention tax credits for oil and gas extraction, the broader regulatory relief and infrastructure funding (Pages 289–318) serve as indirect incentives, lowering operational costs and enhancing project economics and feasibility.
- Long-Term Impact: The restoration of leasing programs, particularly in resource-rich areas like NPR-A, supports sustained production growth, reducing U.S. reliance on foreign energy. However, competition with renewable energy projects (Page 3) and potential legal challenges from environmental groups could complicate long-term access. The flexibility granted to the Secretary of the Interior (Pages 11–12) allows for adaptive management, mitigating these challenges over time.
Implications for the Critical Minerals Industry
- Short-Term Impact: Tax credits for critical minerals production (Pages 183–204) provide immediate financial incentives, reducing the cost of developing extraction and processing facilities. These credits, which prioritize domestic production and exclude prohibited foreign entities (Pages 182–187), encourage companies to leverage federal lands, particularly BLM-managed areas, for compliant operations (Page 184). Certifications to verify domestic sourcing add administrative requirements but ensure alignment with national security goals (Pages 193–199). These incentives could spur significant investment within 2–5 years, accelerating project timelines.
- Long-Term Impact: The phase-out of certain credits by December 31, 2033, creates urgency to establish domestic supply chains, positioning the U.S. as a leader in critical minerals for technologies like batteries and semiconductors (Page 203). These tax credits act as a catalyst for long-term industry growth, attracting capital and fostering innovation.
Comment on Tax Credits and Incentives
The tax credits and incentives in H.R. 1, particularly for critical minerals (Pages 183–204), are significant for the industry. By offsetting the high upfront costs of exploration, development and mining and processing, these credits make domestic projects more competitive, especially in strategic sectors like clean energy and defense. The requirement to exclude prohibited foreign entities ensures that incentives align with national security priorities, encouraging investment in federal lands where compliance can be verified. While the bill does not explicitly provide tax credits for oil and gas, the streamlined permitting and infrastructure funding (Pages 84, 86, 289–318) function as indirect incentives, reducing operational barriers and enhancing profitability. The time-limited nature of some credits (Page 203) adds pressure to act quickly, which could drive rapid industry expansion. Overall, these incentives create a robust framework for boosting domestic production while ensuring economic and strategic benefits.
Positive Economic Impacts
Short-Term Benefits
- Job Creation: Increased leasing and extraction activities, supported by tax credits and regulatory relief, will create jobs in exploration, drilling, mining, and related sectors, particularly in states with significant federal land holdings (e.g., Alaska, Wyoming). Infrastructure investments, such as facility upgrades (Pages 289–318), will stimulate employment in construction and logistics.
- Revenue Generation: The 30% allocation of leasing revenues to the U.S. Treasury (Page 73) and potential state distributions provide immediate fiscal benefits, supporting federal and local budgets.
- Energy Cost Stability: Enhanced domestic oil and gas production, facilitated by streamlined access, could stabilize energy prices, benefiting consumers and energy-intensive industries within 1–3 years.
- Investment Surge: Tax credits for critical minerals (Pages 183–204) will attract private investment, spurring economic activity in mining communities and related supply chains.
Long-Term Benefits
- Energy Independence: Sustained increases in domestic production, driven by tax incentives and expanded land access, reduce reliance on foreign energy and minerals, enhancing economic resilience and national security.
- Industrial Growth: A secure supply of critical minerals, bolstered by tax credits, supports growth in high-tech industries, such as electric vehicles and renewable energy, fostering innovation and attracting investment over decades.
- Economic Diversification: By balancing extraction with other land uses (Pages 75–76), H.R. 1 supports diversified economic activity on federal lands, contributing to long-term regional development.
- Global Competitiveness: Tax credits and incentives position the U.S. as a leader in critical minerals, strengthening its competitive edge in global markets for advanced technologies.
Challenges and Considerations
While H.R. 1 offers significant opportunities, potential challenges include environmental pushback, which could lead to legal or public relations hurdles. Land use conflicts with renewable energy projects and tribal protections (Pages 3, 11) may limit access to certain areas, requiring sensitive coordination. The time-limited nature of some tax credits (Page 203) necessitates rapid industry action to maximize benefits, which could strain smaller operators. Additionally, the focus on domestic sourcing may increase costs for companies reliant on global supply chains, though tax incentives help offset this.
Concluding Comments
H.R. 1 represents a bold step toward unlocking America’s resource potential by enhancing access to federal lands for minerals extraction and leveraging tax credits and incentives to drive industry growth. For the oil, gas, and critical minerals industries, the bill offers immediate opportunities to expand operations and long-term prospects for securing domestic supply chains. The U.S. economy stands to benefit from lower energy and critical mineral costs, job creation, revenue generation, energy independence, and industrial growth. Sustainable land management and stakeholder engagement will be critical if the full benefits of H.R 1 are to be realized. As H.R. 1 is implemented, its impact on America’s resource landscape will shape the nation’s economic and energy future for years to come.